financial institution edition 6 slides of chapter 1

1. ASSALAM OF ALAIKUM
GROUP PARTICIPANTS
HAMMAD AWAN 04
SYED TAYYAB 19
JAWAD AHMED 29

2. TOPICS
• WHY STUDY FINANCIAL MARKETS ?
• WHY STUDY FINANCIAL INSTITUTIONS ?

3. WHY STUDY FINANCIAL MARKETS
• Financial markets, markets in which funds are transferred
from people who have an excess of available funds to people
who have a shortage.
• Financial markets such as bond and stock markets are crucial
to our economy.
• These markets channel funds from savers to investors,thereby
promoting economic efficiency
• Markets activity affects personal wealth , the behaviour of
business firms, and economy as a whole.
• Well functioning financial markets , such as the bond market ,
stock market and foreign exchange market, are key factors in
producing high economic growth.

4. Debts markets and interest rates

5. Debts markets and interest rates

7. THE STOCK MARKET

9. THE FOREIGN EXCHANGE MARKET

10. EXCHANGE RATE OF US DOLLAR 1970-2007

11. Why Study Financial Institutions?
• Financial institutions are what make financial
markets work. Without them, financial markets
would not be able to move funds from people who
save to people who have productive investment
opportunities. They thus play a crucial role in
improving the efficiency of the economy.

12. Structure of the Financial System
• The financial system is complex, comprising
many types of private-sector financial
institutions, including banks, insurance
companies, mutual funds, finance companies,
and investment banks—all of which are
heavily regulated by the government.

13. Financial Crises
• At times, the financial system seizes up and
produces financial crises, major dis- ruptions
in financial markets that are characterized by
sharp declines in asset prices and the failures
of many financial and nonfinancial firms

14. Central Banks and the Conduct of
Monetary Policy
• The most important financial institution in the financial
system is the central bank, the government agency
responsible for the conduct of monetary policy, which in the
United States is the Federal Reserve System .
• Monetary policy involves the management of interest rates
and the quantity of money, also referred to as the money
supply (defined as anything that is generally accepted in
payment for goods and services or in the repayment of debt).

15. The International Financial System
• The tremendous increase in capital flows between
countries means that the inter- national financial
system has a growing impact on domestic
economies. Whether a country fixes its exchange
rate to that of another is an important determinant
of how monetary policy is conducted

16. Banks and Other Financial Institutions

17. Financial Innovation

18. Managing Risk in Financial
Institutions

19. BY
HAMMAD AWAN